Question 1

The oil crises of the 1970s and 1980s can best be illustrated as a shift of the aggregate demand curve to the left.

Accepted Answer

A) True 
 B)False

Question 2

2 shifts to AD1 would be consistent with what economic event in U.S. history? A)  World War II in the 1940s B)  Cost-push inflation in the mid-1970s C)  Demand-pull inflation in the late 1960s D)  Great Recession of 2007-2009" class="answers-bank-image d-inline" rel="preload" > Refer to the figure above. A shift from AD2 shifts to AD1 would be consistent with what economic event in U.S. history?

Accepted Answer

A)   World War II in the 1940s
B)   Cost-push inflation in the mid-1970s
C)   Demand-pull inflation in the late 1960s
D)   Great Recession of 2007-2009E) A) and B)
F) All of the above

Question 3

When the excess capacity of business expands unintentionally, aggregate:

Accepted Answer

A)   Demand will increase
B)   Demand will decrease
C)   Supply will increase
D)   Supply will decreaseE) All of the above
F) C) and D)

Question 4

Inflation tends to:

Accepted Answer

A)   Increase productivity
B)   Decrease input prices
C)   Increase the strength of the multiplier
D)   Reduce the strength of the multiplierE) A) and D)
F) B) and C)

Question 5

Answer the question based on the following list of items that are related to aggregate demand and/or aggregate supply.  Refer to the list above. Changes in which of the above two factors would most likely cause a change in aggregate demand?

Accepted Answer

A)   1 and 5
B)   3 and 10
C)   5 and 7
D)   8 and 9E) B) and C)
F) None of the above

Question 6

1 to AD3? A)  An increase in expected returns on investment B)  An increase in productivity C)  A decrease in real interest rates D)  A decrease in consumer wealth" class="answers-bank-image d-inline" rel="preload" > Refer to the graph above. Which of the following factors will shift AD1 to AD3?

Accepted Answer

A)   An increase in expected returns on investment
B)   An increase in productivity
C)   A decrease in real interest rates
D)   A decrease in consumer wealthE) A) and C)
F) None of the above

Question 7

The real-balance effect explains a shift in aggregate demand, while the wealth effect explains a movement along the AD curve.

Accepted Answer

A) True 
 B)False

Question 8

Cost-push inflation can be described as a rightward shift of the aggregate supply curve.

Accepted Answer

A) True 
 B)False

Question 9

The long-run aggregate supply analysis assumes that:

Accepted Answer

A)   Input prices are fixed while product prices are variable
B)   Input prices are variable while product prices are fixed
C)   Both input and product prices are variable
D)   Both input and product prices are fixedE) All of the above
F) A) and D)

Question 10

An increase in the price level, other things equal, will shift the:

Accepted Answer

A)   Consumption, investment, and net exports schedules of the aggregate expenditures model downward
B)   Consumption, investment, and net exports schedules of the aggregate expenditures model upward
C)   Consumption, and investment schedules of the aggregate expenditures model upward, but the net exports schedule downward
D)   Consumption, and net exports schedules of the aggregate expenditures model upward, but the investment schedule downwardE) A) and B)
F) All of the above

Question 11

If productivity increases, then the per-unit production cost decreases.

Accepted Answer

A) True 
 B)False

Question 12

Suppose that an economy produces 2400 units of output, employing the 60 units of input, and the price of the input is $30 per unit. Refer to the information above. The per-unit cost of production is:

Accepted Answer

A)   $0.25
B)   $0.50
C)   $0.75
D)   $2.00E) None of the above
F) A) and B)

Question 13

A decrease in consumer spending can be expected to shift the:

Accepted Answer

A)   Aggregate expenditures curve downward and the aggregate demand curve leftward
B)   Aggregate expenditures curve upward and the aggregate demand curve leftward
C)   Aggregate expenditures curve downward and the aggregate demand curve rightward
D)   Aggregate expenditures curve upward and the aggregate demand curve rightwardE) All of the above
F) A) and C)

Question 14

The stimulus package that the government implemented during the Great Recession of 2007-09 did not have as strong an impact on GDP and unemployment as expected, for the following reasons, except:

Accepted Answer

A)   Very high debt levels of households
B)   Consumers raised their saving rates
C)   The stimulus package caused prices to fall in many sectors
D)   The effects of the stimulus package were diffuse and spread thinly among many sectorsE) A) and B)
F) A) and C)

Question 15

The short-run version of aggregate supply assumes that product prices are:

Accepted Answer

A)   Fixed while resource prices are flexible
B)   Flexible while resource prices are fixed
C)   Both input and product prices are flexible
D)   Both input and product prices are fixedE) None of the above
F) All of the above

Question 16

1, then the economy will adjust by: A)  Increasing output produced B)  Decreasing the GDP produced C)  Reducing the price level D)  Increasing the total output demanded" class="answers-bank-image d-inline" rel="preload" > Refer to the graph above. If the price level is initially at P1, then the economy will adjust by:

Accepted Answer

A)   Increasing output produced
B)   Decreasing the GDP produced
C)   Reducing the price level
D)   Increasing the total output demandedE) B) and D)
F) A) and B)

Question 17

Suppose that an economy produces 2400 units of output, employing the 60 units of input, and the price of the input is $30 per unit. Refer to the information above. The level of productivity in this economy is:

Accepted Answer

A)   20
B)   30
C)   40
D)   50E) B) and C)
F) A) and D)

Question 18

If the dollar appreciates relative to foreign currencies, then:

Accepted Answer

A)   U.S. goods will look cheaper to foreign buyers
B)   Foreign goods will look more expensive to U.S. buyers
C)   Net exports of the U.S. will increase
D)   Foreign buyers will find U.S. goods become more expensiveE) A) and B)
F) B) and C)

Question 19

The aggregate expenditures schedule relates total spending with the price level, while the aggregate demand schedule relates total demand for output with income.

Accepted Answer

A) True 
 B)False

Question 20

The economy experiences an increase in the price level and an increase in real domestic output. Which is a likely explanation?

Accepted Answer

A)   Interest rates have increased
B)   Business taxes have increased
C)   Wage rates have fallen
D)   Net exports have increasedE) A) and D)
F) C) and D)

Exam 12: Aggregate Demand and Aggregate Supply

If the dollar appreciates relative to foreign currencies, then:

Correct AnswerverifiedShow Answer

The aggregate expenditures schedule relates total spending with the price level, while the aggregate demand schedule relates total demand for output with income.

Correct AnswerverifiedShow Answer

The stimulus package that the government implemented during the Great Recession of 2007-09 did not have as strong an impact on GDP and unemployment as expected, for the following reasons, except:

Correct AnswerverifiedShow Answer

Answer the question based on the following list of items that are related to aggregate demand and/or aggregate supply. Refer to the list above. Changes in which of the above two factors would most likely cause a change in aggregate demand?

Correct AnswerverifiedShow Answer

When the excess capacity of business expands unintentionally, aggregate:

Correct AnswerverifiedShow Answer

The real-balance effect explains a shift in aggregate demand, while the wealth effect explains a movement along the AD curve.

Correct AnswerverifiedShow Answer

Refer to the graph above. Which of the following factors will shift AD1 to AD3?

Correct AnswerverifiedShow Answer

The long-run aggregate supply analysis assumes that:

Correct AnswerverifiedShow Answer

Refer to the graph above. If the price level is initially at P1, then the economy will adjust by:

Correct AnswerverifiedShow Answer

Refer to the figure above. A shift from AD2 shifts to AD1 would be consistent with what economic event in U.S. history?

Correct AnswerverifiedShow Answer

Suppose that an economy produces 2400 units of output, employing the 60 units of input, and the price of the input is $30 per unit. Refer to the information above. The level of productivity in this economy is:

Correct AnswerverifiedShow Answer

Suppose that an economy produces 2400 units of output, employing the 60 units of input, and the price of the input is $30 per unit. Refer to the information above. The per-unit cost of production is:

Correct AnswerverifiedShow Answer

A decrease in consumer spending can be expected to shift the:

Correct AnswerverifiedShow Answer

An increase in the price level, other things equal, will shift the:

Correct AnswerverifiedShow Answer

Inflation tends to:

Correct AnswerverifiedShow Answer

The short-run version of aggregate supply assumes that product prices are:

Correct AnswerverifiedShow Answer

The oil crises of the 1970s and 1980s can best be illustrated as a shift of the aggregate demand curve to the left.

Correct AnswerverifiedShow Answer

Cost-push inflation can be described as a rightward shift of the aggregate supply curve.

Correct AnswerverifiedShow Answer

If productivity increases, then the per-unit production cost decreases.

Correct AnswerverifiedShow Answer

The economy experiences an increase in the price level and an increase in real domestic output. Which is a likely explanation?

Correct AnswerverifiedShow Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Refer to the graph above. Which of the following factors will shift AD₁ to AD₃?

Correct Answer
verified

Correct Answer
verified

Refer to the graph above. If the price level is initially at P₁, then the economy will adjust by:

Correct Answer
verified

Refer to the figure above. A shift from AD₂ shifts to AD₁ would be consistent with what economic event in U.S. history?

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified